The EU increased its growth forecast for 2021 as the eurozone economy is strong against higher energy prices, supply chain bottlenecks and a new wave of Covid cases.
The European Commission, the EU's executive arm, predicted that the eurozone economy will increase by five percent, instead of 4,8 percent previously, and by the same amount across all 27 bloc's 27 member states.
The prediction for growth next year was slightly lower, to 4.5 percent, with a big slowdown seen for 2023, to a still strong 2,4 percent.
The commission ensured that its latest forecasts were marked by great uncertainty and that Covid-related risks could throw its upbeat outlook off course.
The recovery continues to be dependent on the evolution of the epidemic, both within and outside the EU, warned EU economic affairs commissioner Paolo Gentiloni.
The commission said that it expected inflation to peak at 2.6 percent this year before easing slightly next year.
The European Central Bank said that inflation would fall to below target levels in 2023, backing the stance that current jumps in consumer prices will stop.
The commission said that recent price jumps were linked to the post-pandemic re-opening and are still expected to be transitory.
Gentiloni pointed to signs in the gas markets that indicated that energy prices were past their peak.
He said that forecasting is a difficult job in these times, so we should monitor the situation.
The forecasts are used as a quarterly exercise by the EU executive and are used as a benchmark for the commission's oversight of the member state economies, including government spending.
The Commission said the public debt levels in Italy, France, Belgium, Greece, Spain, and Portugal would be above 100 percent of GDP through 2023.
The EU went on a reform of its budget rules last month, which limits public debt to 60 percent of GDP.
Some member states, led by France, are asking for changes to the rules in order to avoid damaging austerity policies that would sabotage the recovery after the pandemic.